Iwan MorganIwan Morgan blog brought to you by History News Network.Tue, 31 Mar 2015 22:04:09 +0000Zend_Feed_Writer 2.1.3 (http://framework.zend.com)http://historynewsnetwork.org/blog/author/8
editor@hnn.us (History News Network)History News NetworkThe Joyless Recoveries in the UK and the USATue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/153550
http://hnn.us/blog/153550Iwan MorganIwan Morgan040 Years of Free Market Policies Is Long Enough for the Magic of the Market to Have Worked. So What Went Wrong?Tue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/153490
http://hnn.us/blog/153490Iwan MorganIwan Morgan0The Great War and the Great Recession: The Frightening ParallelsTue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/153453
http://hnn.us/blog/153453Iwan MorganIwan Morgan0Piketty’s Charge Against the Ramparts of the RightTue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/153350
http://hnn.us/blog/153350Iwan MorganIwan Morgan0The World Economic Forum of 2014: Trapped in the PastThe economic glitterati at Davos showed no inclination to think seriously about the deeply embedded problems that have taken second-place to the immediate needs of recovery from the 2007-09 meltdown.]]>Tue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/153289
http://hnn.us/blog/153289Iwan MorganIwan Morgan0Of Shibboleths, Showdowns and Shutdowns… or Madison’s NightmareAmericans probably don’t want to read another piece on the shutdown.
However it’s impossible to let the incredible events of this week go by
without a comment from this UK blogger. ]]>Tue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/153181
http://hnn.us/blog/153181Iwan MorganIwan Morgan0It's Time for a Madam Chairman at the Federal Reserve]]>Tue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/153150
http://hnn.us/blog/153150Iwan MorganIwan Morgan0The Ten Biggest Economic Policy Mistakes from the Depression to the RecessionImage viaShutterstock.

I have just finished teaching a graduate course on the management of the U.S. economy from the Great Depression to the Great Recession. Given that economic crises bookended the syllabus, student interest in the review session unsurprisingly focused on discussing macroeconomic policy errors more than successes.

This set me thinking as to what I would adjudge the ten greatest economic policy errors from the late 1920s to the present. My list and rationale appear below. But first some caveats.

Such a listing tends to focus on short-term rather than long-term consequences because the latter are more difficult to track and link to specific policies. It can also be difficult to separate policy effects from broader structural movements in the U.S. and world economies that would have produced similar outcomes anyway. Furthermore, judgements about whether policy outcomes are good or bad reflect the values of the assessor -- people with different political views to mine would likely produce a different list.

In the over 250-year-old history of modern capitalism, the economic output of the West has consistently ticked upward, with just a few deviating blips from the dominant trend of growth. Even the greatest crisis of capitalism, the Great Depression of the 1930s, looks on paper to be no more than a brief interruption to the historic course of Western economic expansion. It is hardly surprising, therefore, that any sign of forward spurt from the Great Recession of 2007-09 and its economically anaemic aftermath is greeted with optimism that the historically proven resilience of capitalism is fuelling regeneration.

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http://hnn.us/blog/150730Iwan MorganIwan Morgan0The New Age of AusterityThurman Arnold, assistant attorney general in the Roosevelt administration from 1938 to 1943.

The double-whammy of recession and sovereign debt crisis has made austerity the buzzword of politics in European Union nations in recent years. Now the A-word has become increasingly a part of political rhetoric in the United States. In his recent book Age of Austerity, journalist Thomas Byrne Edsall argues that America has already entered a new age of austerity that will remake its politics in the second decade of the twenty-first century. In his view the intensified polarization of Democrats and Republicans constitutes the first shots in a struggle over diminished national resources. Gone for good, he argues, are the days when the two parties could engage in a tacit compromise to fund their respective social-program expansion and low-tax agendas from the proceeds of economic growth.

Mitt Romney claims that his success in business qualifies him for election as president in order that he can put the national economy right just like he has previously succeeded in putting many a business enterprise back on its feet. According to him, "Americans need a conservative businessman to get this economy moving again, not career politicians. That is why I am running."

Critics have been quick to point out that his business success with Bain Capital in particular involved destroying jobs as well as creating them. However, his claims that entrepreneurial competence will translate into effective presidential leadership on the economy have resonated with public opinion, and appear to have gained increased legitimacy in the wake of a successful performance in the first presidential debate.

Regardless of the shortcomings of Obama’s economic leadership, Romney’s argument that his business experience will make him a more successful economic manager than his Democratic rival is a spurious one if judged on the historical record.

Last week, the Romney campaign responded to criticisms of its tax and economic proposals by issuing a new white paper, "The Romney Program for Economic Recovery, Growth and Jobs." Authored by Greg Mankiw of Harvard, Glenn Hubbard of Columbia, John Taylor of Stanford, and Kevin Hassett of the American Enterprise Institute, this makes three claims in trashing the Obama administration's record on recovery and virtually promising a re-run of morning-again-in-America if the GOP candidate is elected president in 2012. First, recovery from the Great Recession has been terribly slow even by post-financial crisis downturn standards; second, the Obama administration made a grievous error in relying on spending stimulus to renew the economy; and third, the tax cuts, spending cuts and deregulatory initiatives proposed by Romney will usher in a period of rapid growth to revitalize employment and generate a bountiful harvest of budget revenues.

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http://hnn.us/blog/147713Iwan MorganIwan Morgan0EurotrashAnother week, another crisis for the euro -- and there's plenty of more crisis weeks to come! It's going to get a lot worse for the euro -- but can it ever get better? It's far more likely that the euro project is in terminal decline and that nothing can save it.

If the euro were a business, it would have been wound up by now. It has an awful business plan that only appeared to work in the benign economic conditions of the first few years of this century and whose inadequacies were painfully exposed when it first experienced economic problems. Only the core business -- that is, Germany -- has been able to withstand the harsher economic conditions in existence since 2007. There is boardroom squabbling, the workforce is in rebellion, and no one has a viable Plan B for a sustainable way ahead.

Eurozone leaders claim to have a survival plan but the details are murky and appear largely to be more of the same: structural reform to make member economies more competitive; a new fiscal pact to ensure member states live within their means; and some new infrastructure spending to soften the impact of austerity that is making voters angry.

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http://hnn.us/blog/146466Iwan MorganIwan Morgan0BRIC by BRIC: The Changing Global Economic LeagueChina’s anticipated overtaking of the U.S. as the world’s biggest economy has become the focus of much comment of late. Equally important, however, are the changes already happening and likely to accelerate regarding the rising challenge of other BRIC nations in the world economic league. Earlier this month, Brazil replaced the U.K. as the sixth largest economy. This was a moment of some symbolism: Brazil used to be part of what historians have called Britain’s "informal empire," being under the sway of British trade, capital, and inward investment in the nineteenth century.

In the last decade, Brazil has consolidated its status as an agricultural and processed foodstuffs superpower, commodities that now account for a quarter of GDP and 36 percent of exports. It has become the world’s largest producer of sugarcane, coffee, tropical fruits, and commercial cattle (whose number is 50 percent larger than in the United States.). Brazil has also discovered massive oil reserves in the Atlantic, which have helped make it the world’s ninth-largest oil producer and raised the prospect of it eventually becoming the fifth-largest. The country is currently engaged in a massive program of infrastructure improvement to enhance growth, funded by the proceeds of its recent wealth creation.

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http://hnn.us/blog/145199Iwan MorganIwan Morgan0Is the U.S. in Relative Decline? Sadly, the Answer is Yes. The U.K. press is currently full of reports about the visit of China's leader-designate, Xi Jinping, to Washington this week. "The princeling and the professor" was one paper's editorial take on the Xi-Obama get together. Apart from personalities, however, what has consumed British interest is the accompanying debate about whether the U.S. is in decline. We've been there a century before, so we're agog to discuss if this signals a historic moment in the process of principal power succession from the U.S. to China.

This blog is contribution to this debate. It focuses on the issue of America's relative economic decline. I have to say -- with regret -- that I see this as already in process: it's no longer a question of whether -- but of pace and extent.

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http://hnn.us/blog/144652Iwan MorganIwan Morgan0The Lost Generation? Youth and the Great RecessionAs the governments of the European Union countries and (possibly, but less likely) the United States peer ahead to the threat of a new recession in 2012, one common demographic group in these nations is still deeply mired in the effects of the Great Recession that supposedly ended in 2009. Youth unemployment for the 16 to 24-year-old age group averaged 18.3 percent in the U.S. and 21 percent across the 27-member E.U. in 2010-2011. In the E.U., the highest youth unemployment rates have been in Spain, with 45 percent, and Greece, with 42.9 percent, which offer a marked contrast to the relatively low levels in some economies—notably the Netherlands (7 percent), Austria (8.3 percent), and Germany (8.9 percent). Unemployment is also above the E.U. average in Italy (27 percent) and France (23 percent), while in the U.K. it has been around 20 percent. These figures are not far behind the 21.8 percent youth unemployment in the long stagnant MENA (Middle East and North Africa) countries. ]]>Tue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/143868
http://hnn.us/blog/143868Iwan MorganIwan Morgan0The UK's Deficit Dogma: The Lessons for the U.S.In the U.S., the failure of the congressional super-committee to reach agreement on deficit reduction looks set to trigger massive automatic spending cuts in both domestic and defense programs from 2013 onwards. While debt reduction is unquestionably necessary in the medium to long-term, placing it ahead of building a strong economic recovery is likely to do more harm than good. The United States should look no further than the United Kingdom for proof of the folly of prioritizing fiscal austerity over laying the foundations for post-recession economic growth.]]>Tue, 31 Mar 2015 22:04:09 +0000http://hnn.us/blog/143338
http://hnn.us/blog/143338Iwan MorganIwan Morgan0The European Debt Crisis: A Problem of Political Will?Back in the summer, as US politicians seemed on the verge of failing to agree a debt limit extension to avoid default on America's obligations, Europeans looked on in scornful amazement at an apparent failure of leadership. Now the shoe is very much on the other foot. Speaking on November 16, President Barack Obama accused the Eurozone of suffering from "a problem of political will" that put the future of the single currency at risk. America's leaders succeeded in averting a default crisis when common sense finally prevailed (though the Democrats paid a higher price for reason than the Republicans). Whether Europe's leaders can pull off their own great escape is much more open to doubt because in their case their sovereign debt problem is much graver than America's debt limitation problem and the solution to it is far less readily apparent.

Signifying the sense that there is a problem of political will, the current leaders of the single currency project - Angela Merkel and Nicolas Sarkozy - are widely compared unfavorably in the media with their predecessors who built the foundations of the European project in the

In early August, The Economist put America's chances of a double-dip recession in the coming year at 50 percent. If anything, things look even bleaker some two months on. The recovery that began in 2009 is in danger of petering out. In the first two quarters of 2011 the United States achieved an annualized growth rate of just 0.8 percent, far below the 2.5 percent annual expansion that economists consider the minimum necessary to make a dent in the present unemployment rate of 9.2 percent. On a per-person basis, inflation-adjusted GDP now stands at virtually the same level as in the second quarter of 2005. If this trend continues the United States is in the sixth year of what could go down in history as its version of Japan's "lost decade" of the 1990s.

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http://hnn.us/blog/142060Iwan MorganIwan Morgan0The European Sovereign Debt Crisis and AmericaThree years ago, the conventional wisdom in Europe was that its economic problems were made in America. This was widely believed true because of the toxic spread of the sub-prime crisis from the U.S. through the agency of debt-financing derivatives. Now, however, Europe's problem with sovereign debt has worrying consequences for the United States. As such, America's prospects of economic recovery continue to be entwined with those of Europe.

Although other euro zone countries have experienced sovereign debt problems, the epicenter of the crisis continues to be Greece. Fear of a Greek default remains the source of considerable agitation in European banking circles. It is now evident that French banks, which were largely immune from the effects of the sub-prime crisis, are particularly vulnerable to such a development because of their holdings in Greek bonds. This is especially the case with BNP Paribas (the biggest French funder), Societe Generale, and Credit Agrocole. To make matters worse, French banks did not build up their reserves in the wake of the sub-prime crisis in the manner of U.S. and UK banks because they did not consider the effects to be so severe for them.